The agreement, entered into in March as per filings with the Ministry of Corporate Affairs last month, will help Amazon Pay secure the money generated through its pre-paid instruments and services.

Simply put, when an Amazon Pay user tops up the wallet, the money will go into this escrow account.

When the user pays through Amazon Pay, the money will be held in the escrow account and released to the seller or merchant only after the customer has received the product or service.

E-mail queries sent to Amazon seeking more information on the agreement didn’t elicit an immediate response.

While escrow accounts are common in the real estate and stock market, the concept is fairly new for India’s emerging payments space. However, industry analysts say there are global precedents.

Satish Meena, senior forecast analyst at market research firm Forrester, says the practice has been around for quite some time in economies like China. He cites the example of Alipay, the online payment service of Ant Financial, which is part of the Alibaba Group.

“When you are working with a large number of sellers, it is good to have an escrow mechanism to ensure comprehensive consumer experience. Also, now that Amazon has released its payments system beyond the e-commerce platform, it will add more services under it,” he said.

A rather late entrant into the space, Amazon currently has a minuscule market share. However, the fact that it is deep-pocketed and does not rely on external sources for funding are some of the obvious advantages it has over competition.

“Moves like these can be seen as Amazon’s intent to differentiate itself in the space, besides adding value for users… The digital payments sector is still niche and maturing,” Meena added.

Amazon recently announced that its payments platform will also support mobile recharge. However, incumbents like Paytm and MobiKwik already host an array of services apart from mobile recharge, such as payment of utility bills, bus-booking, movie-ticketing, and DTH and broadband recharge, among other things. As such, it remains to be seen if the move will bring any traction for Amazon Pay in the crowded payments space.

“The number of merchants who are currently accepting Amazon Pay is not very large. The company is yet to figure out its other potential use cases and positioning. At this point, its primary use case is restricted only to its platforms,” Meena added.

In his recent address to the media, Amazon’s India head Amit Aggarwal had indicated that its new payments service following the Reserve Bank of India licence will be broader in scope than Pay Balance.

Amazon Pay launched its services for third-party payments recently, and is in talks to bring several other merchants on-board. Recent media reports have also said that Amazon may soon enable payments via the Unified Payments Interface (UPI) channel.

Rival Flipkart, another late entrant into the payments space, launched its UPI-based solution PhonePe for offline commerce in July. Last month, PhonePe announced that it had achieved an annual run rate of $2.5 billion. It is believed to be the most used UPI-based digital transaction platform after BHIM.

Amazon Pay secured its prepaid payment instrument licence from the RBI in March this year.

The e-tailer’s rising focus on digital payments can also be gauged from the recent fund injections into Amazon Pay, which received $20 million and $10.5 million between May and July this year.

Amazon Pay’s authorised share capital was recently hiked from Rs 69 crore to Rs 400 crore, show filings with the Registrar of Companies. In February, it had bought Noida-based payment gateway firm Emvantage, marking its first acquisition in India.